Back to index of Nerve 14 - Summer 2009

The Union Makes Us Stronger

By Terry Egan

At a time when, thanks to the bankers, we are plunging into full blown economic depression, it might seem rather fortunate to be ‘financially excluded’. However, the fact is that people without access to basic financial services such as bank accounts and affordable credit pay a high price, as Save the Children Fund* and others have shown.

Three areas of expenditure highlight the ‘poverty premium’ problem graphically: paying for utilities, purchasing large household/white goods and accessing credit.

People using pre-payment methods for gas and electricity supply can often be charged as much as 30% more than those who can afford to pay using direct debits or online.

Major household goods or fridges/cookers etc. purchased through companies such as Brighthouse can cost more than twice as much, and embroil people in long term costly hire purchase type arrangements.

Finally, lack of access to affordable credit can result in people paying interest rates that are truly staggering. The Provident typically charges 180% APR, Shopacheck 200% APR and Log Book Loans (you sell them the equity in your car in exchange for a loan) a nifty 400% APR.

These are examples of the legalised extortion that go on daily in our communities. These companies prey on individuals and families struggling to get by. Fortunes are made for shareholders and monies haemorrhage out of the local economy. Credit Unions - for too long a well-kept secret - are rising to these challenges.

Kirkby Credit Union, which grew out of Northwood and Westvale Credit Unions and is set to become Knowsley Mutual**, is ready for the scrap.

Kirkby Credit Union is a financial services cooperative owned and run by its members. It offers a range of easy savings, the main one being a share account against which members can borrow and which has paid a dividend of no less than 3% for the last 10 years.

Savers can get loans at an interest rate of 12.6% APR. Equal to 6.5p in the £ when paid back over 1 year. (The Provident charges 80p in the £).

A cheque cashing service and basic debit card account are two new services that are being put in place.
Credit unions are a community solution to the problems of debt and poverty. While they cannot impact on relative poverty - in that they do not increase people’s income - they can dramatically reduce their outgoings. Money not being paid to extortionate lenders and others can go on other household needs. Monies that would exit the local economy will tend to circulate locally and generate income and jobs. Joining and becoming active in the credit union is an act of enlightened self-interest.

So don’t just sit there praying for the end of capitalism. Join the cooperative revolution now.

Terry Egan, Development/Financial Inclusion Worker, Kirkby Credit Union

*Save The Children Fund-The Poverty Premium 2008
**Kirkby Credit Union is changing its common bond to be open to anyone who resides or works in Knowsley and its name to Knowsley Mutual Credit Union.

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